Shares of Affirm, the buy-now-pay-later startup, rocketed more than 32% Thursday after the company reported fiscal fourth quarter earnings that blew past estimates. The strong performance caused Jason Kupferberg, a Bank of America senior equity research analyst, to boost his price objective for Affirm to $42 from $36.
Late Wednesday Affirm reported a loss of 14 cents a share for the three months ended June 30, down from a 69-cent loss for the same time period in 2023 and well below the 51 cents expected by analysts. Affirm’s total revenue rose about 48% to $659.2 million for the quarter, above the $604 million that was expected. Net losses narrowed to $45.1 million from $206 million in losses posted in Q4 2023.
Affirm said gross merchandise volume, or GMV, which refers to the total amount of sales made during a time period, grew 31% to $7.2 billion.
Max Levchin, a PayPal co-founder, launched Affirm in 2012 after a negative experience paying off credit card debt, Coins2Day reported. The San Francisco company provides financing and payments services for consumers. Its main financing option is buy-now-pay-later loans.
Affirm was part of a wave of nearly 400 companies that listed their stock in 2021, going public at $49 a share. Affirm’s stock performed well for much of 2021, hitting an all-time high of $168.52 in November of that year. Like most public fintechs, Affirm’s stock gave back much of those gains. Since then, Affirm’s shares have traded well-below its IPO price, dropping to a 52-week low of $15.97 in October. On Thursday, the stock rallied on its strong Q4 performance, gaining $10.12 to $41.70 in early afternoon trading.
Levchin noted in a shareholder letter that Affirm had hit its goal of achieving profitability on an adjusted operating income basis at the end of its fiscal 2023 when it reported operating income of $15 million. On Wednesday, Levchin set another goal: “We intend and expect to be profitable on a GAAP basis in our fourth fiscal quarter, and plan to operate the business while maintaining GAAP profitability thereafter,” he said in the letter.
Affirm is poised to reach profitability much sooner than expected, Kupferberg wrote in an Aug. 28 research note. “We view the lower interest rate environment, scale-driven profitability outlook and AFRM’s idiosyncratic growth prospects as attractive,” he said. Kupferberg reiterated his Buy rating, while increasing his price objective to $42.
David Scharf, an equity research analyst at Citizens JMP, said he raised his fiscal year 2025 adjusted earnings per share estimate for Affirm to 88 cents from 52 cents and his fiscal 2026 adjusted EPS estimate to $1.28 from 76 cents, according to an Aug. 29 research note. “We are updating our estimates to reflect the strong growth and margin expansion implied by the initial fiscal 2025 guide, and to reflect this quicker growth and higher profitability continuing into fiscal 2026,” Scharf said. He maintained his Market Perform rating.
